PremiumThe sharp fall in the rupee after a firm opening on Monday was likely due to a large Indian conglomerate purchasing dollars, said traders, along with mid-month greenback demand by oil and defence companies.
The Indian rupee reversed its early gains to end weaker on Monday as dollar demand from corporates increased, with cautionary words on U.S. inflation from a Federal Reserve official keeping the greenback firm.
The rupee eased by 48 paise to close at 81.26 against the US dollar on Monday, having opened at 80.52. The currency had risen 1.2 per cent over the past two sessions, with Friday's gains the biggest intraday move in almost four years.
The sharp fall in the rupee after a firm opening on Monday was likely due to a large Indian conglomerate purchasing dollars, said traders, along with mid-month greenback demand by oil and defence companies.
The dollar index climbed 0.5% to 106.85, having shed 1.8% on Friday to hit a near three-month low after a slightly cooler-than-expected inflation data last week sent the greenback into a tailspin.
It got some support from Fed Board Governor Christopher Waller saying that other similar readings would be needed to show convincingly that inflation was easing. However, he did add that the central bank could start thinking about hiking at a slower pace.
Asian currencies mostly weakened after a two-day rally, while equities were mixed.
On the domestic equity market front, BSE Sensex fell 170.89 points or 0.28 per cent to end at 61,624.15, while the broader NSE Nifty declined 20.55 points or 0.11 per cent to 18,329.15.
Foreign Institutional Investors (FIIs) were net buyers in capital markets as they purchased shares worth ₹3,958.23 crore on Friday, according to exchange data.
India's annual wholesale price index (WPI) inflation for the month of October 2022 eased to 8.39% year-on-year, in single digits and the lowest since March 2021, helped by a fall in commodity prices, the government data showed on Monday.